U.S. court extends block on Biden's student loan forgiveness plan

[November 15, 2022]  (Reuters) -A U.S. appeals court has extended a block on President Joe Biden's plan to cancel hundreds of billions of dollars in student loans, a court filing on Monday showed.

The St. Louis-based 8th U.S. Circuit Court of Appeals issued an injunction barring the U.S. Department of Education from erasing student loan debt based on Biden's executive order in August.

The ruling comes in a lawsuit filed by the states of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. The six states argue that Biden skirted congressional authority and that the plan threatens future tax revenues and money earned by state entities that invest in or service student loans.

The court on Oct. 21 temporarily barred the Biden administration from discharging student loans while it considered an emergency request for an injunction by the six states. The states' lawsuit was dismissed, though they are appealing that decision.

"We are confident in our legal authority for the student debt relief program and believe it is necessary to help borrowers most in need as they recover from the pandemic," White House spokeswoman Karine Jean-Pierre said in a written statement on Monday.

"The Administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle class Americans," Jean-Pierre said.

Biden's plan would eliminate roughly $430 billion of the $1.6 trillion in outstanding student debt, according to the nonpartisan Congressional Budget Office.

U.S. President Joe Biden delivers remarks on "student debt relief" during a campaign stop at Central New Mexico Community College (CNM) Student Resource Center in Albuquerque, New Mexico, U.S., November 3, 2022. REUTERS/Kevin Lamarque/File Photo

The program calls for forgiveness of up to $10,000 in student loan debt for borrowers making less than $125,000 per year, or $250,000 for married couples. Borrowers who received Pell Grants to benefit lower-income college students could see up to $20,000 of debt canceled.

The policy fulfilled a promise that Biden made during the 2020 presidential campaign to help debt-saddled former college students. Democrats had hoped the policy would boost support for them heading into last week's midterm elections.

Several conservative state attorneys general and legal groups have challenged the plan in court, though plaintiffs have struggled to establish they were harmed by it in such a way that they have standing to sue.

A federal judge in Texas on Nov. 10 ruled that the plan was unlawful after a lawsuit brought by two borrowers who were partially or fully ineligible for the loan forgiveness. The Justice Department moved to appeal the ruling.

The White House has said it will keep pursuing the policy. Last week, however, the federal government stopped taking applications amid the legal challenges.

(Reporting by Nate Raymond in Boston; Additional reporting by Steve Holland in Washington and Dan Whitcomb in Los Angeles; Editing by Susan Heavey, David Gregorio and Rosalba O'Brien)

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